Fourth Quarter 2011 Highlights:
- Revenue increased 60.6% over same quarter last year to $139.0 million
- Net loss of $2.01 million from net income in same quarter last year of $5.10 million
- Net loss in the quarter resulted from lowered margins in the EMS sector, increased R&D expenditures, one-time acquisition related expenses and impairment of goodwill
Full Year 2011 Highlights:
- Revenue increased 21.3% over last year to $306.4 million
- Net income decreased to $3.02 million from $12.83 million last year
- Sold 1,833,000 Leimone brand phones, compared to 708,000 in 2010
- Sales of own brand products increased to $93.9 million or 30.6% of revenues versus $36.9 million or 14.6% of revenues in 2010
- Electronic Manufacturing Service (EMS) decreased to $187.9 million from $209.8 million in 2010
BEIJING, April 16, 2012 (GLOBE NEWSWIRE) -- Zoom Technologies, Inc. (Nasdaq:ZOOM), a leading China-based manufacturer of mobile phones and other mobile electronic products, today reported financial results for the fourth quarter and full year ended December 31, 2011.
For the fourth quarter of 2011, Zoom generated net revenue of $139.0 million, up 60.6% over $86.6 million for the fourth quarter 2010; and up 173.9% sequentially from $50.8 million in the third quarter of 2011. The jump in revenues in the fourth quarter is mainly due to i) significant increase in sales of our Leimone brand phone to 1,278,000 units just in the fourth quarter versus 554,000 units in total for the first three quarters combined, and ii) our newly acquired subsidiary in New York, Portables Unlimited LLC - a wholesale distributor of T-Mobile USA products and services, for the last two and a half months of the quarter, contributed $13.5 million in sales.
For the full year of 2011, Zoom reported revenue of $306.4 million, up 21.3% over $252.6 million for the full year 2010. The year over year revenue growth was primarily attributed to the increase in sales of our Leimone brand phones.
Mr. Lei Gu, Chairman & CEO of Zoom explained, "The sales results of our Leimone brand phones in 2011 is testimony to the strength in our own design and manufacturing. We look forward to continuing this trend in gaining market share by our branded products, and at the same time more OEM customers are relying on us for whole phone design work as well. We anticipate picking up significant volumes of contracted ODM - original design and manufacturing work, from large customers all over Asia and beyond."
For the fourth quarter of 2011, Zoom reported a net loss of $2.0 million, compared to net income of $5.1 million in the fourth quarter of 2010. In the last few months of 2011, despite a credit tightening environment and that we engaged in less profitable manufacturing contracts in order to maintain a stable employment level at the factory, our normal operations would still have managed a slight net income of approximately $1 million in the fourth quarter of 2011. However, one-time acquisition related expenses, increase R&D expenditures and impairment of goodwill, resulted in a net loss for the quarter.
Gross profit for the fourth quarter of 2011 was $6.2 million compared to $11.6 million in the fourth quarter of 2010, and down slightly sequentially from $6.7 million in the third quarter of 2011. Gross profit for the year 2011 was $25.2 million, down slightly from $27.7 million for 2010. Gross margin was 8.2% for 2011 down from 11.0% for 2010. Net margin was reduced to 1.0% in 2011 as compared to 5.0% in 2010. The decrease in net income in 2011 from 2010 was mainly due to i) less profitable EMS business activities toward the last few months in 2011, ii) increase R&D expenses of about $2.6 million for the year, iii) one-time acquisition costs of about $1.6 million, and iv) impairment of goodwill of about $1.0 million.
Looking ahead, Mr. Gu remarked, "From the beginning of the year 2012, we anticipate a shift from the traditional assembly-focused manufacturing for our OEM customers to delivering whole phone solutions to large mobile operators and well-known brands in Asia. These activities should enable Zoom in 2012 to return to normal profitability and healthy margins."
Conference Call Details
Zoom will review the fourth quarter and full year 2011 results and discuss management's expectations for 2012 today, Monday, April 16, 2012 at 4:30 p.m. EDT (1:30 p.m. PDT). The dial-in numbers are +1-855-500-8701 for U.S. domestic callers and +65-6723-9385 for international callers, and then enter the access code (conference ID) 71270246. A replay of the conference call will be available through April 19, 2012. The replay dial-in numbers are +1-866-214-5335 for U.S. domestic callers and +61-2-8235-5000 for international callers, and then enter access code 71270246.
About Zoom Technologies, Inc.
Zoom Technologies is a holding Company with subsidiaries that engage in the manufacturing, research and development, and sale of electronic and telecommunication products for the latest generation mobile phones, wireless communication circuitry and related software products. Zoom Technologies' subsidiary, Jiangsu Leimone, owns a majority stake of TCB Digital, which offers highly customized and high quality Electronic Manufacturing Service (EMS) for Original Equipment Manufacturer (OEM) customers as well as its Own Brand Manufacturing (OBM) under the ZOOM, LEIMONE and LONGTEL brand names. The Company's products are both exported globally and sold domestically in People's Republic of China. Zoom Technologies recently acquired ownership in Portables Unlimited LLC, a cellular service and products distributor in the U.S.
The Zoom Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9665
Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" that involve risks and uncertainties. These include statements about our expectations, plans, objectives, assumptions or future events in which the outcome cannot be assured. You should not place undue reliance on these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances or reflect the occurrence of unanticipated events.
| ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| December 31, 2011 | December 31, 2010 | |
| ASSETS | ||
| Current assets | ||
| Cash and equivalents | $ 1,131,109 | $ 6,374,103 |
| Restricted cash | 15,507,408 | 13,503,122 |
| Accounts receivable, net | 48,970,549 | 21,740,642 |
| Inventories, net | 3,070,000 | 1,955,458 |
| Purchase deposit | 8,549,315 | -- |
| Other receivables and prepaid expenses | 9,784,007 | 432,205 |
| Advance to suppliers | 9,834,017 | 32,776,983 |
| Notes receivable | 1,086,606 | 746,922 |
| Due from related parties | 30,425,700 | 19,056,574 |
| Costs in excess of revenue - R&D contracts | 91,880 | 531,617 |
| Deferred tax assets, net | 56,149 | 103,419 |
| Total current assets | 128,506,740 | 97,221,045 |
| Property, plant and equipment, net | 6,260,675 | 4,949,920 |
| Equipment deposit | 101,859 | -- |
| Construction in progress deposit - related party | 10,170,809 | 9,790,700 |
| Intangible assets | 772,527 | 525,458 |
| Goodwill | 36,332,497 | 8,498,897 |
| TOTAL ASSETS | $ 182,145,107 | $ 120,986,020 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Short-term loans | $ 26,405,343 | $ 21,945,664 |
| Notes payable | 29,443,650 | 25,318,370 |
| Accounts payable | 14,336,883 | 1,488,548 |
| Accrued expenses and other payables | 10,173,712 | 1,170,952 |
| Advance from customers | 1,112,179 | 301,014 |
| Taxes payable | 4,287,309 | 4,711,893 |
| Interest payable | 85,323 | 25,027 |
| Dividends payable | 622,606 | 599,338 |
| Due to related parties | 6,742,373 | 2,884,340 |
| Total current liabilities | 93,209,378 | 58,445,146 |
| Long-term payables | 145,000 | 580,000 |
| Long-term notes payable | 500,000 | -- |
| Long-term loan | 10,458 | -- |
| TOTAL LIABILITIES | 93,864,836 | 59,025,146 |
| COMMITMENTS | ||
| STOCKHOLDERS' EQUITY | ||
| Preferred stock: authorized 1,000,000 shares, par value $0.01 none issued and outstanding | -- | -- |
| Common stock: authorized 35,000,000 shares, par value $0.01 | ||
| Issued 23,865,723 shares and outstanding 23,864,043 shares; and Issued 15,275,572 shares and outstanding 15,273,892 shares at December 31, 2011 and December 31, 2010 | 238,640 | 152,739 |
| Shares to be issued | 1,000 | 557 |
| Subscription receivable | -- | (61,200) |
| Deferred expenses | (1,400,068) | (227,226) |
| Additional paid-in capital | 53,133,895 | 38,204,403 |
| Treasury shares: 1,680 shares at cost | (7,322) | (7,322) |
| Statutory surplus reserve | 682,528 | 682,528 |
| Accumulated other comprehensive income | 2,081,429 | 964,206 |
| Retained earnings | 22,048,539 | 19,030,933 |
| TOTAL STOCKHOLDERS' EQUITY | 76,778,641 | 58,739,618 |
| Noncontrolling interest | 11,501,630 | 3,221,256 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 182,145,107 | $ 120,986,020 |
| ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME | ||
| Years Ended December 31 | ||
| 2011 | 2010 | |
| Net revenues | $ 306,374,389 | $ 252,589,072 |
| Cost of goods sold | 281,179,403 | 224,884,782 |
| Gross profit | 25,194,986 | 27,704,290 |
| Operating expenses: | ||
| Sales and marketing | 798,345 | 466,493 |
| General and administrative | 8,216,982 | 4,390,168 |
| Research and development | 5,874,728 | 3,251,209 |
| Non-cash equity-based compensation | 2,413,992 | 1,688,372 |
| Impairment of goodwill | 1,033,762 | -- |
| Total operating expenses | 18,337,809 | 9,796,242 |
| Income from operations | 6,857,177 | 17,908,048 |
| Other income (expenses) | ||
| Interest income | 322,261 | 256,612 |
| Loss on disposal of fixed assets | (8,529) | (60,573) |
| Government grants | 236,503 | 122,675 |
| Other income | 1,394,396 | 286,661 |
| Interest expense | (2,771,861) | (1,391,510) |
| Exchange loss | (91,698) | (34,411) |
| Other expenses | (357,270) | (245,873) |
| Total other expenses | (1,276,198) | (1,066,419) |
| Income before income taxes and non-controlling interest | 5,580,979 | 16,841,629 |
| Income taxes | 2,307,570 | 3,832,772 |
| Income before noncontrolling interest | 3,273,409 | 13,008,857 |
| Less: income attributable to noncontrolling interest | 255,803 | 183,253 |
| Net income attributable to Zoom Technologies, Inc. | 3,017,606 | 12,825,604 |
| Foreign currency translation gain - Zoom Technologies, Inc. | 1,117,223 | 650,230 |
| Foreign currency translation gain - Noncontrolling interest | 121,557 | 103,203 |
| Comprehensive income Zoom Technologies, Inc. | $ 4,134,829 | $ 13,475,834 |
| Comprehensive income noncontrolling interest | $ 377,360 | $ 286,456 |
| Basic and diluted earnings per common share: | ||
| Basic | $ 0.18 | $ 1.07 |
| Diluted | $ 0.15 | $ 0.97 |
| Weighted average common shares outstanding: | ||
| Basic | 17,156,446 | 12,035,589 |
| Diluted | 20,110,099 | 13,210,181 |
| ZOOM TECHNOLOGIES, INC. AFFILIATES & SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| Years Ended December 31 | ||
| 2011 | 2010 | |
| Cash flows from operating activities: | ||
| Income including noncontrolling interest | $ 3,273,409 | $ 13,008,857 |
| Loss from discontinued operations | ||
| Adjustments to reconcile income including non-controlling interest to cash used in operating activities: | ||
| Depreciation and amortization | 1,691,187 | 1,626,501 |
| Non-cash equity-based compensation | 2,413,992 | 1,688,372 |
| Provision for inventory obsolescence | (108,096) | -- |
| Provision on accounts receivable | 703,994 | 87,588 |
| Loss on disposal of fixed assets | 8,529 | 60,573 |
| Impairment for goodwill | 1,033,762 | -- |
| Changes in deferred tax assets | 50,421 | 350,429 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (20,900,645) | (3,199,401) |
| Inventories | 52,082 | (359,066) |
| Advances to suppliers | 23,720,640 | 8,700,946 |
| Prepaid expenses and other assets | (15,507,644) | (187,436) |
| Accounts payable | 1,805,357 | (1,019,655) |
| Advance from customers | 273,787 | 60,457 |
| Related parties-net | (6,828,582) | (12,309,184) |
| Accrued expenses and other current liabilities | 1,367,451 | 2,546,076 |
| Net cash provided by (used in) operating activities | (6,950,356) | 11,055,057 |
| Cash flows from investing activities: | ||
| Restricted cash | (1,455,083) | (1,073,912) |
| Cash paid for long-term investments | -- | (500,000) |
| Cash paid for acquisition of subsidiary | (1,400,000) | |
| Purchase of property and equipment and other long-term assets | (115,368) | (9,614,315) |
| Proceeds from (payment on) notes receivable | (305,446) | (18,257) |
| Cash increase due to acquisition of subsidiaries | 316,160 | 1,491,630 |
| Net cash used in investing activities | (2,959,737) | (9,714,854) |
| Cash flows from financing activities: | ||
| Issuance of shares for cash | 3,102,464 | 8,194,413 |
| Proceeds from short-term loans | 27,773,276 | 36,034,236 |
| Advance to related parties | (542,003) | (12,154,025) |
| Repayment on borrowing from related parties | (320,000) | (23,643,764) |
| Proceeds from borrowings from related parties | 125,000 | -- |
| Proceeds from (repayment on) notes payable | 3,089,328 | 501,556 |
| Collection on advance to related parties | 939,717 | 4,709,255 |
| Receipt from related parties | (4,091,718) | 21,353,981 |
| Repayments on short-term loans | (25,535,290) | (31,465,282) |
| Repayments on long-term loan | (9,634) | -- |
| Net cash provided by financing activities | 4,531,140 | 3,530,370 |
| Effect of exchange rate changes on cash & equivalents | 135,959 | 31,230 |
| Net (decrease) and increase in cash and equivalents | (5,242,994) | 4,901,803 |
| Cash and equivalents, beginning balance | 6,374,103 | 1,472,300 |
| Cash and equivalents, ending balance | $ 1,131,109 | $ 6,374,103 |
| Years Ended December 31 | ||
| 2011 | 2010 | |
| SUPPLEMENTARY DISCLOSURES: | ||
| Interest paid | $ 1,324,331 | $ 1,427,540 |
| Income tax paid | $ 2,812,248 | $ 92,255 |
| Non-cash investing and financing activities | ||
| Acquisition of 29.0% of TCB by issuing 2,462,576 shares | $ -- | $ 4,348,247 |
| Acquisition of 100% of Silver Tech by issuing 1,342,599 shares | $ -- | $ 9,590,000 |
| Acquisition of 100% of CDE by issuing 484,800 shares | $ 1,818,000 | $ -- |
| Acquisition of zoom.com domain name by issuing 80,000 shares | $ -- | $ 349,600 |
| Acquisition of 55% of Portables by issuing 1,494,688 shares | $ 3,306,171 | $ -- |
| Shares issued to settle T-Mobile indebtedness | $ 2,566,284 | $ -- |
| Note issued to CNCG as part of Portables acquisition | $ 500,000 | $ -- |